How the UK's largest wealth managers are getting ready for FCA Consumer Duty requirements.
Assessing and adapting your communications to comply with the FCA’s new Consumer Duty is crucial. This isn’t just about satisfying the FCA – it’s a chance to foster greater trust, transparency, and fair treatment of clients. By adopting a robust, consistent and scalable audit process, you can tackle the task head on. We’ve been working with some of the UK’s biggest firms to help them do 4 things:
1. Find out what your Consumer Duty scope covers
If it goes in front of a client, it has to be Consumer Duty compliant. This takes in all your key touchpoints: from websites, to marketing materials, to client correspondence.
But there’s good news. Many shorter, compliance-focussed documents will present similar problems with similar solutions (fund factsheets are a prime example). This is particularly true when it comes to design and typography changes. It’s easy to feel as though you’ve got a mountain to climb, but the more you get to grips with the practicalities of the task, the more manageable it will seem.
2. Build a Consumer Duty audit framework
Many firms struggle with what seems like a high degree of subjectivity in Consumer Duty. And plenty of the language and principles that the FCA uses do make compliance feel tricky. What does the FCA mean, for example, to put yourself ‘in your customers’ shoes’?
Thankfully, the FCA has included some really detailed, practical guidance on what it believes makes communication effective. Lots of these ideas – like starting a letter with a summary of its most important elements – are simply good practice for communicating complex information. It’s also relatively straightforward to establish an objective test of whether or not a piece of communication meets the standard.
3. Run a pilot Consumer Duty audit
That’s not to say you should take your framework and attempt to audit every piece of communication from scratch. A pilot programme that samples a small percentage of that whole will help you work out in which areas you’re most exposed and where you might have less to do.
Start by picking a representative sample of communications from different products, services and customer journeys. This could include fund factsheets, client agreements, marketing brochures and boilerplate correspondence. The pilot has two outputs: first, useful qualitative and quantitative data on the communications you audit; second, an idea of how well your audit framework functions in practice.
4. Empower your staff to take the Consumer Duty audit process live
Given the size of the task you could be facing, you’ll want to involve as many people from the firm as possible to identify which documents need work and how much. The first step is to educate everyone on Consumer Duty in general, and the consumer understanding outcome in particular.
Next, you need everyone involved to understand what the audit framework is for and how to use it. Worked examples show where something isn’t up to scratch and how it could be improved can be particularly useful. Ultimately, you want everyone to have the confidence to say whether a brochure, letter or entire webpage meets the objectives of the Consumer Duty – or whether it’s going to need an overhaul.